Oracle faces lawsuit over sales commissions

Posted February 14th, 2017.

As it appeared on the San Francisco Chronicle
By Bob Egelko, San Francisco Chronicle

Lawyers for a former Oracle America saleswoman accused the Silicon Valley technology giant Tuesday of cheating employees out of millions of dollars by retroactively cutting their sales commission rates, and then deducting the difference from their paychecks, in order to boost company profits.

“Oracle has systematically stiffed its salesforce of earned commission wages for many years,” attorneys said in a proposed class-action lawsuit filed in San Francisco federal court. The suit seeks over $150 million in damages for more than 1,000 past and present employees over a four-year period.

The lead plaintiff, Marcella Johnson, said she started working at Oracle’s Redwood City headquarters in March 2013, selling software for managing human resources and personnel, and was paid her first commissions in November and December 2013. The company told her she could expect $50,000 to $60,000 in commissions per year, in addition to her base salary of $65,000, her lawyers said.

But in early 2014, Johnson said, she was given a new contract with lower commission rates, retroactive to June 2013, and was told she owed Oracle about $20,000 for the higher commissions she had already received. She said the company told her that if she quit, she would face a lawsuit to collect the money.

Johnson said she kept working until she had made $20,000 in commissions, then left her job in July 2014. Her suit said Oracle’s actions violate the employees’ contracts, California labor laws against wage-payback schemes, and the state’s ban on unfair business practices.

A company spokeswoman, Deborah Hellinger, said, “Oracle categorically denies the allegations and we will vigorously defend against them.”
The lawsuit acknowledged that Oracle’s employment contracts authorize the company to reduce commission payments retroactively, and that employees are asked to sign the revised mid-year agreements, or “re-plans,” that lower their past and future commission rates.

But the company coerces employees to comply by threatening to cut off their commissions if they refuse to sign the “re-plans” within 24 hours, and then makes the reductions even for those who refuse to sign, Johnson’s lawyers said. And despite a state law requiring commission contracts to spell out the methods for computing and paying commissions, they said, Oracle refuses to disclose the reasons for the lower rates.

“You cannot sign your rights away to earned wages,” said Xinying Valerian, one of the lawyers who filed the suit.

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